Posted on 08/20/2009 4:26:09 PM PDT by chuck_the_tv_out
President Obama, once considered as politically agile and deft as a gazelle, is now looking increasingly like a deer caught in the headlights.
His poll numbers on everything from job approval to his handling of the economy, health care, taxes and bailouts are dropping faster than a cement shoe in the Hudson River. Perhaps even more worrisome, Rasmussen Reports shows that fewer Americans consider him “trustworthy.”
His popular support is hemorrhaging because all of his major initiatives are either failing in execution or in the legislative process. According to a new USA Today/Gallup Poll, 57 percent of Americans say the $787 billion economic stimulus is having no effect on the economy or is making it worse.
An even higher percentage -- 60 percent -- doubt the stimulus will improve the economy in the years ahead. A new Fox News/Opinion Dynamics poll shows a whopping 72 percent of Democrats, Republicans and independents would like to see the balance of the unspent stimulus money -- about $600 billion -- returned to taxpayers.
(Excerpt) Read more at washingtontimes.com ...
Finally you are starting to get it.
The photo is perfect.
Not sure what these consumers are buying . . . prices seem to be going up on things I regularly buy.
I think his popularity on FR is remaining steady - somewhere in the negative numbers.
Don’t forget Jews.
Students,
and a whole lot of pathetic conservatives especially females are all groups who voted for this punk.
They usually don't ask for cash, they prefer an increase in their account at the Fed.
You should look into how the check clearing system works. You wouldn't make such stupid claims if you did.
Then who does get that other $9M?
So what? So the Fed is the clearing house. Fine. The BofA account at the Fed gets drawn down. The American Express account goes up. Those are the bookkeeping entries that I talked about. Just ones and zeros on a computer somewhere at the Fed. This doesn't change the basic issue: There still is $9 million extra bucks out on the street bidding up the price of everything. This is THE CAUSE OF INFLATION. Period.
We were talking about a bank with a single deposit of $1,000,000 cash, they have no account at the Fed to make good your imagined $10 million in loans. Try again?
LOL. Why do you think they call it FRACTIONAL Reserve Banking? You need a little time with Wikipedia or better yet try some Murry Rothbard. It would do you good and you wouldn't look so foolish.
LOL. Why do you think they call it FRACTIONAL Reserve Banking?
Because they hold a fraction of deposits aside as reserves. Which means a $1,000,000 deposit allows loans of less than $1 million not multiples of $1 million.
You need a little time with Wikipedia or better yet try some Murry Rothbard.
Yeah, as soon as you learn what fraction means.
"By its nature, the practice of fractional reserve banking expands money supply (cash and demand deposits) beyond what it would otherwise be. Because of the prevalence of fractional reserve banking, the broad money supply of most countries is a multiple larger than the amount of base money created by the country's central bank. That multiple (called the money multiplier) is determined by the reserve requirement or other financial ratio requirements imposed by financial regulators."
I don’t see anything there about banks loaning multiples of deposits. Try again?
Freedom to sell equity? It's regulated but it is real. Freedom to issue banknotes? Makes sense in an electronic world as long as it is backed by something. And as long as they don't get on the Treasury's (read IRS) radar screen. Free to issue IOU's backed by nothing? Absolutely and it will get you into a lot less trouble at the IRS. I don't think lack of freedom is the real problem here, the problem is lack of faith in private parties to honor paper IOU's.
Methinks you doth protest too much...
Groceries and the non-grocery stuff you buy at a supermarket.
A bank issues a CD, not payable on demand, with 3 months to run. It ladders tons of these and lays off interest rate risks on third parties it can rely one, and then makes longer loans to businesses, which pay as contracted and send cash to it as fast as the CDs that mature are presented for withdrawal or transfered to checking.
It is certainly increasing the broader money supply. It is certainly making each dollar buy less compared to what it would be worth if no new loans were ever issued by anyone. It is benefiting itself in interest rates spreads, it is benefiting its lendees in access to capital more cheaply than they would get it if they had to pay the rates that would prevail if no new loans were ever issued by anyone, it is benefiting its lenders by paying them interest collected from its lendees and by selecting those careful to ensure that they are.
There isn't the slightest particle of fraud, manipulation, counterfeiting, misrepresentation, or malpractice in any of that, but it certainly increases money supply, and that has all the macroeconomic effects of any other way said money supply is increased. If other men have a right for the money supply to not increase, then they have a right to demand the bank acting as described by stopped from doing so. But you can't point to a single act involved, that has the least particle of wrong in it. Nor the least particle of involuntary anything.
The demand that the value of my commodities not decrease because someone else has increased the supply, is the essence of *restrictionism*. Not confined or applied to money. It is in fact the standing policy of monopolists seeking to extract a monopoly rent or of cartels trying to replicate that situation. Despite the fact that more of a demanded commodity can be profitably supplied to the market, those already in possession of some quantity of that commodity, demand that its production be legally prevented, solely in order to enjoy a higher price for their chosen commodity.
No trained economist would regard that demand as in any public interest, nor just, nor having any economic right in its favor - if the commodity were building nails or gasoline, for example. There is no question that a law forbidding the production of building nails would increase the exchange value of existing building nails. But this is no reason whatever to support such a law.
Preventing the extension of credit does tend to increase the exchange value of existing money. But there is no more reason to support such a prohibition, than to support forbidding the production of nails.
Notice first that the policy of restrictionism raises the value of an existing commodity, compared to what it would be with production allowed, regardless of the actual change in its price over time, or the sign of that change. A demand that no nails be produced is not the same as a demand that only so many nails be produced as is compatible with the price of nails not falling - but the principle is the same, and the difference is only one of degree. No owner or producer of nails has any right that runs against a prospective supplier of other nails (or nail substitutes), that would justify restricting those other men's freedom, just to support the price of his nails.
What is different in any of this about money? In principle and in equity, nothing. Pragmatically there is an additional consideration. The price of money remaining broadly stable has been found to be conducive to economic planning. It has been found that it is even more important that the course of that price be broadly predictable, than that the predicted and actual course be "broadly unchanged."
This is not a fact about rights. It is not a fact about principle. It is an empirical piece of practical economic observation or applied econometrics. Other things being equal, economic growth is likely to be smoother and more sustained, if the course of the general price level is smooth and the scale of change in it is modest over short time scales.
This creates a practical justification for regulating the rate of provision of new credit. But only broadly as a public policy interest, and not as a private right of this or that holder of this or that commodity. It is something practical businessmen or officials might reasonably debate and alter around the margins, not something each private individual could justly sue over.
In fact, the form that public regulation of the growth of money takes in this country, acknowledges all of this. The Fed does not restrict growth in broader forms of money. Banks are not legally required to hold reserves against their CD or savings account positions. They are, prudentially, required to hold capital against all of their risk adjusted *assets*, but that refers to ther *other side* of their balance sheet, not to their liabilities. And they can adjust to it simply by raising capital.
The only thing the Fed actually regulates is the growth of narrow money, M1. That is limited by the reserve requirement to a fixed multiple of the size of the Fed's own balance sheet. The Fed cannot force banks to lend up to those limits and in practice they do not do so, particularly in weak economic periods. Instead they become capital-constrained by the asset side of their sheets, not reserve-constrained on the liability side.
The Fed does not prevent them from expanding their CD positions without corresponding increases in M1 or their reserves. It could not do so and allow for real economic growth. Since men typically keep the portion of their total wealth held in liquid form broadly stable over long time scales (while varying countercyclically on short ones, to be sure), as overall wealth advances, broad money holdings must also advance. Since there is real economic growth and real increase in wealth, broad money holdings must advance faster than prices. And this is seen to be the case. There is no tendency for the "velocity" of broad money to remain the same, or otherwise put, savings forms of money-substitutes increase in line with nominal economic growth and not in line with prices. (The difference between those being precisely the real component of growth).
Since the authorities know as a theoretical matter that broad money can increase faster than prices, sustainably, and the amount by which it exceeds narrow money and price growth is a function of real growth, it prudently leaves that question up to private banks, to judge as they please. They can get it wrong. Doing so will hurt them - it will result in loans made in excess of real economic growth turning into bad loans. That feedback and incentive being present is all the system requires.
None of it can eliminate human error, and every error in the allocation of capital entails loss. Every loss of material amounts of capital, even to other men, hurts everyone else as well, because all capital has uncaptured positive externalities. None of it can eliminate cycles, which are natural. But none of it harms anyone in anything they have an economic right to, either, and none of it restricts unduly any critical economic freedom.
Every other proposal made by critics of this system does err in all of those ways. Every such proposal pretends that absent infallibility, men should not be free to choose for themselves in extending credit. Since infallibility is nowhere to be had among human beings, this is a recipe for slavery, not freedom. If every economic act anyone else commits that harms me, initiates a right to remove their liberty to engage in that act; and if every material misallocation of capital harms everyone, which it does; and if men are fallible, which they are; then all freedom to engage in any meaningful economic action will be eliminated. Nothing would survive that maxim being generalized.
Hayek told us that sacrificing economic liberty in the name of economic security was a fool's bargain. That economic security cannot be had, full stop. But economic liberty can be lost in its pursuit. He told us that we must simply learn that freedom has costs and one of the costs of freedom in the occasional inconvenience caused by other men's errors. He got that right, and Mises got it wrong.
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